Bitrace releases the 2025 encryption crime report.

This report statistically analyzes and discloses the scale of major encryption crime types, and clarifies the impact of compliance facilities on the scale of the criminal industry, calling on the industry and government to pay attention to the harm caused by encryption crime.

Written by: Bitrace

The year 2024 is a milestone year for the Web3 industry. The market capitalization of Crypto and the adoption of industry infrastructure have reached unprecedented heights. At the same time, the criminal industry has begun to utilize Crypto infrastructure more to optimize its business or create new crime paradigms. This report statistically discloses the scale of major types of encryption crime and clarifies the impact of compliance facilities on the scale of the criminal industry, calling for the industry and government to pay attention to the harm caused by encryption crime.

Due to space constraints, this article only presents part of the conclusions and data from the report. You are welcome to visit the Bitrace official website to download the full version.

Cryptocurrency crime situation remains severe

Number of stablecoins received by high-risk addresses

Considering that risky activities mainly occur in Ethereum and Tron networks, Bitrace defines blockchain addresses used by illegal entities to receive, transmit, and store stablecoins (erc20_usdt, erc20_usdc, trc20_usdt, trc20_usdc) in these two networks as high-risk addresses. In the past year 2024, the total amount received by such high-risk addresses reached 649 billion dollars, slightly higher than the previous year.

High-risk activities account for the proportion of total trading volume of stablecoins

Calculated by trading volume, this high-risk activity accounts for 5.14% of the total trading activity of stablecoins for the year, a decrease of 0.80% compared to 2023, but still significantly higher than in 2021 and 2022.

High-Risk Address Receiving Stablecoin Classification

Based on the type of stablecoin, USDT on the TRON network accounted for the largest share from 2021 to 2024. However, in 2024, the share of USDT and USDC on the Ethereum network both increased.

The scale of online gambling continues to grow

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The number of stablecoins charged by the gambling platform

In 2024, the funding scale of online gambling platforms and the payment platforms providing deposit and withdrawal services for them will reach 217.8 billion USD, an increase of over 17.50% compared to the scale in 2023.

Stablecoin Classification for Gambling Platforms

Statistics on the types of stablecoins used by online gambling platforms show that the share of USDC in 2024 has significantly increased to 13.36%, far higher than 5.22% in 2023. This indicates that as the market share of USDC rises, its adoption in the online gambling sector has also greatly improved, despite being issued and regulated by compliant entities.

The scale of black and gray market transactions remains unchanged

Black and gray industry transaction address receives stablecoin amount

In 2024, the Ethereum network and the TRON network received funds exceeding $278.1 billion from business addresses related to black and gray market transactions, slightly higher than in 2023, and the transaction volume in these two years far exceeds that of 2021 and 2022.

Closely related to the development of the black and gray industries is the cryptocurrency escrow trading platform, which can almost provide escrow services for all links in the upstream and downstream of the black and gray industry, establishing trust among criminals.

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Good Wang Guarantee Receives Stablecoin Amount

The rise of Haowang Guarantee and its competitors in Southeast Asia is accompanied by the gradual popularization of stablecoins in local real economic activities. This trend is particularly evident in 2024, when its business scale had expanded to 2.64 billion dollars in the fourth quarter of that year.

The scale of encryption fraud has surged dramatically

Fraudulent address receives stablecoin amount

In 2024, blockchain addresses associated with fraudulent activities saw an explosive growth in stablecoin transactions. Compared to 2021-2023, the funding scale for that year has reached 52.5 billion USD, surpassing the total of previous years.

However, this astonishing growth trend may not be entirely accurate, as the statistical values are limited by the statistical methods of security vendors and the rising level of fraud by illegal entities. For example, as security vendors support many new public chains, more criminal incidents will be observed, which means that events that occurred in the past may not have been included in the statistics; incidents that occur within centralized institutions and are not voluntarily disclosed by the victims also cannot be included in the statistics.

With the improvement of statistical methods and the increase in case disclosures, this batch of data will further grow in the investigation report of the next year.

The scale of money laundering begins to shrink

Money laundering address receives stablecoin amount

In 2024, blockchain addresses related to money laundering activities received a total of $86.3 billion in stablecoins, slightly lower than in 2023 and on par with 2022. This figure may indicate that significant law enforcement activities and regulatory legislation by major policy entities in the past two years have effectively suppressed the money laundering crime situation in the encryption industry.

The proportion of stablecoin scale collected by major centralized exchanges for money laundering

Considering that centralized exchanges have unique advantages in terms of capital liquidation compared to other entities, making them more susceptible to being favored by money laundering gangs, Bitrace conducted a fund audit on the hot wallet addresses of major centralized cryptocurrency trading platforms.

The results are similar to the investigation in the fraud chapter; the scale of the platform’s money laundering activities is generally proportional to its business scale, but OKX’s share has significantly decreased in recent quarters, which may be the result of its Compliance operations.

The activity of freezing stablecoins on the blockchain has significantly increased

The number of stablecoins frozen by Tether and Circle

2024 is a year where stablecoin issuers actively cooperate with law enforcement. Tether and Circle have frozen over $1.3 billion worth of stablecoins on the Ethereum and Tron networks, which is twice the scale of freezes in the previous three years.

The number of stablecoins received by the frozen address that year

Statistics on the fund transfer activities of frozen addresses for the year indicate that the transaction scale in 2024 reached 12.9 billion USD, which is basically on par with 2023. This suggests that on-chain encryption criminal activities began to become active several years ago, but effective crackdowns did not start until 2024.

• It is worth emphasizing that not all the driving factors for the frozen addresses are related to the cases involved. In this statistics, Bitrace did not exclude this part, so the actual scale will be slightly smaller.

Trends in Sanctions by OFAC and NBCTF

Addresses associated with OFAC and NBCTF sanctioned entities receiving stablecoin amounts

The Office of Foreign Assets Control (OFAC) of the U.S. Department of the Treasury and the National Bureau for Counter Terrorist Financing (NBCTF) of Israel are two agencies related to sanctions and counter-terrorism financing. They have a significant amount of cooperation in combating terrorism financing and the financial networks associated with terrorist organizations such as Hamas. They conduct funding statistics on blockchain addresses related to sanctioned entities disclosed by these two organizations, with the overall funding scale reaching its peak in 2022 and subsequently declining year by year.

Although regulatory measures by government agencies can have a significant impact on the businesses of sanctioned entities, they are of little effect on criminal groups that utilize these infrastructures for illegal activities, as the anonymity and lack of requirements inherent in encryption technology make it difficult for such entities to be sanctioned and highly substitutable. Regulatory authorities should conduct more in-depth investigations into encryption-related crimes and take appropriate law enforcement actions against criminal gangs.

Regulation brings positive impact to Hong Kong

2024 is a year of accelerated compliance for the encryption industry. Globally, major regulatory bodies have shifted from a wait-and-see approach to more proactive involvement, driving the industry towards more standardized and transparent development. Taking Hong Kong as an example—

Hong Kong’s compliance policy has built a safer and more controllable encryption ecosystem through clear legal requirements, customer fund protection, combating illegal activities, attracting institutional funds, and aligning with international standards. This not only reduces direct financial losses caused by hacking, platform bankruptcies, or legal penalties but also lowers indirect risks by enhancing market trust and stability. For crypto entities, although compliance costs increase in the short term, they significantly reduce the likelihood of fund exposure to uncontrollable risks in the long run.

The proportion of high-risk funds in Hong Kong Web3 entity stablecoin income

Conduct a fund analysis on the VATP and VAOTC addresses that primarily serve Hong Kong customers. The data shows that after the third quarter of 2023, the proportion of risk stablecoins flowing into the local area has sharply decreased, indicating that following the release of compliance policies and several high-profile cryptocurrency-related cases, local trading activities related to risk activities and stablecoins have been effectively suppressed.

Summary

2024 is a year of comprehensive revival for the industry, as well as a significant year for major economies to start facing the importance of the industry. Although the scale of encryption crime has not diminished, top-down compliance regulatory policies and bottom-up industry self-discipline have already brought positive impacts to the cryptocurrency industry in certain countries or regions.

The industry will usher in a safer and more trustworthy future, and we believe this is self-evident.